Re-evaluating Inequality in India: A Counter-Narrative to the Rising Disparity Debate
UPSC Relevance
Prelims: Indian Economy (Poverty, Inequality, Gini Coefficient, Household Consumption Expenditure Survey - HCES, Taxation, Welfare Schemes), Reports and Indices (World Bank, World Inequality Lab).
Mains:
GS Paper 1: Poverty and developmental issues; Salient features of Indian Society.
GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Inclusive growth and issues arising from it; Government Budgeting.
Key Highlights from the News
This article challenges the common argument that inequality is increasing in India.
According to a recent World Bank report, extreme poverty in India has almost been eliminated, and consumption inequality has significantly decreased.
The Gini coefficient based on consumption decreased from 28.8 in 2011-12 to 25.5 in 2022-23.
This finding is based on data from the Household Consumption Expenditure Survey (HCES) 2022-23.
HCES data shows that the diet of the poor has improved (decreased share of cereals, increased consumption of milk, eggs, fruits), and asset ownership has increased (house, vehicle).
The author argues that the figures from the World Inequality Lab (WIL), which are used to claim high income inequality in India, have methodological limitations.
WIL's figures are based on pre-tax income. However, the article states that when taxes and government subsidies (post-tax, post-subsidy/transfer income) are considered, income inequality also appears to decrease.
Even according to WIL's data, between 2017 and 2022, the income share of the bottom 50% increased, and the share of the top 10% decreased.
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